Lords of Finance by Liaquat Ahamed
I first saw this book in the departure lounge of Tullamarine airport in Melbourne, where I was searching for some good local history that wasn’t, really, essentially, when it comes down to it and you really think about it, a bit racist. I was instead drawn to this book solely by its cover, which is quite exceptionally good. An embossed, almost filigreed title, set against a sumptuous antiquarian gold background which acts as a stage for the four central bakers of the early twentieth century, standing atop a melting monetary globe. In fact so convincing was the cover’s decadence that the shop had seen fit to charge about £32-that’s pounds-for it. Deciding that all that glitters is not necessarily worth £32 I decided I would try to pick it up cheaper in the UK, where I found it on a 3 for 2 a few moths later.
Whenever I saw it resting on the bookshelf each day I wondered if I had solely been drawn in by the cover. A 500 pages book about reparations, equity, the gold standard, trade embargos, illustrated with graphs,-the actual economics of the Great depression, not the soup kitchen drama aspect-seemed a bit keen, in hindsight, for someone who laboured to achieve a C in maths at GCSE. I picked up a book about the Nazi Economy about the same time last year, but after about 170 pages I became uninterested in milk yields in the Third Reich, irrespective of what sort of insight they offered on one of history’s most depraved episodes*.
I had a week’s holiday booked though, with time to read a challenging book built in. So after two months of deliberation I picked up Lords of Finance, more or less with the intention of being able to say that I had read the big book with the really nice cover, with a sort of intellectual trepidation akin to how your body feels about a challenging mountain climb: One day someone will point at it and say something positive, and you will be able to go one further and claim a deeper appreciation of the phenomena because you did it, without admitting that in reality all that amounts to is being able to say a slightly more personal declarative statement when the subject arises. A puritan duty to bettering myself, without joy, possibly as penance for being frivolously drawn to a book solely for its burnished jacket, was my inspiration when I picked the book up.
This weight of sombre conviction was quickly evaporated however. Lords of Finance is an excellent, multi-disciplinary work which comprises biography, politics, economics and social history. The narrative begins on the dawn of WW I and follows a linear course through to the mid thirties, framed through the lives of the major economic figures of the time. This is a clever device as it allows for a simpler, yet dramatic explanation of the necessary but frequently indecipherable inclusion of economic theory. The debate over British currency in the mid twenties, for example, is given a full chapter, and an exploration of the jousting between Maynard Keynes and supporters of the gold standard is elevated into exciting intellectual history with its own set pieces and chronology.
The greatest strength of this biographical approach however lies in the opportunity to examine the four great powers of the time and their reaction to the challenges of the First World War. Each country involved is essentially assigned a standard bearer in the form of key economists of their time, the eponymous Lords of Finance. Hjalmar Schacht exemplifies the post-Bismarck Germany, his class and regional resentment married to the prodigious success borne of a modernist education, established bureaucratic structure and ambition; American banker Benjamin Strong Jr is an example of the classic contradiction of American real politick, where genuine moral idealism fights a frequently losing battle with cold, self informed pragmatism; The cape wearing Montagu Norman, sharp of wit and principle but woolly headed and sentimental, illustrates the growing anachronism and naivety of the British Empire; and Emile Moreau of the Banque de France, whose paranoid, extravagant and bathetic nature served to inform economic policy which was as much political as fiscal.
- “Montagu Place named after Montagu Norman, former Governor of the Bank of England? Dig it chile. Groovy. ‘Scuse me while I kiss the sign.”
All of these figures are portrayed as rather tragic, yearning for a stauts qou of mercantilism and imperial prosperity long tested to breaking point . Ahmed contends that this attitude only served to prolong the ungainly transition of an old order however, and in doing so the great bankers of the era helped to ensure a generation would experience massive destitution.
The birth pangs of a new and necessary epoch are evoked brilliantly through recounting the economic events of the post war world . The swing from the confidence of hard, demonstrable material prosperity and its attendant financial respectability and civility exemplified in the gold standard, to an economic wasteland where reams of paper currency are required by the wheelbarrow full to buy a loaf of bread. Britain, once banker of the world, too proud to devalue its currency, choosing instead to foist depression on her population. Germany, with nothing to lose, playing the equivalent of economic Russian Roulette, nihilistically testing and teasing a fiscally aggressive and nervous France. While Europe smoulders in the ruins of the war, Wall Street booms and stock rates reach a level of pure, hubristic fantasy. A concise but full study of Maynard Keynes and his clarion brilliance serves to underline the sense of a status qou revelling in ostentatious, obsolescent death throes.
There are parallels to be drawn with current events of course. There is more there than purely narrative history for the attentive reader. The last chapter is an excellent essay which compares the events of the book to the financial climate of the 1990’s onwards. There is a large garnish of economic theory which can be essentially picked at or devoured depending on your interest. As a critical point it should also be noted that the author is/was a banker (Boo, etc), so make of that what you will in terms of bias.
In light of the events of the last few years I certainly expected this to be the sort of history you read sagely whilst slapping your forehead at the inability of humanity to learn from its previous mistakes. History definitely repeats itself, and there are shades of that here.
The great accomplishment of Lords of Finance however is to evoke a world almost unimaginably different from the one we live in now, and in this regard it is an assured and brilliant study. No one really knows what lies around the corner in terms of the world’s financial state, but in comparison to the grotesque, almost carnival economics of the 1920’s things seem positively pedestrian in their stability.
I’ve always enjoyed history because at its best, it is more incredible and brilliant than anything you could ever make up, and this book, in its measured, warm way, is an excellent example of that.
*As an aside: My wife always laughs at me when I jest that I’m in danger of attracting females when heading out to the Gym or the pub. “What are you going to do, seduce them with history chat?” Reading that paragraph back just now it seems as though that’s exactly what I’d do, intentional or otherwise.